DEF 14A of Ironwood Pharmaceuticals Inc

Filed Apr 25, 2024 · FY20230001104659-24-051992

Open on EDGAR

Our Board of Directors
Our Board of Directors
Who We Are
Who We Are The following table sets forth certain information, as of April 25, 2024, with respect to each of our directors. Each director has been nominated for election at the 2024 annual meeting of stockholders to serve for a one-year term extending until the 2025 annual meeting of stockholders and his or her successor is duly elected and qualified.
Who We Are
| Name | Age | Audit Committee | Governance and Nominating Committee | Compensation and HR Committee | | Mark Currie, Ph.D. | 69 | | | ✓ | | Alexander Denner, Ph.D. | 54 | | C | | | Andrew Dreyfus | 65 | | | C | | Jon Duane | 65 | | ✓ | ✓ | | Marla Kessler | 54 | | | ✓ | | Thomas McCourt | 66 | | | | | Julie McHugh, Chair | 59 | ✓ | ✓ | | | Catherine Moukheibir | 64 | C | | | | Jay Shepard | 66 | ✓ | | |
Who We Are
“C” indicates chair of the committee.
Who We Are
| MARK CURRIE, Ph.D. Partner, Iaso Ventures, LP Age: 69 Director since 2019 Board Committees • Compensation and HR Committee | • Dr. Currie has been a partner of Iaso Ventures, LP, an early-stage healthcare venture capital firm, since January 2024. Dr. Currie was previously the chair of the scientific advisory board of Cyclerion Therapeutics, Inc., or Cyclerion, a clinical-stage biopharmaceutical company, from January 2021 to September 2023. Prior to that, Dr. Currie served as Cyclerion’s president and chief scientific officer from April 2019 to December 2020. Prior to joining Cyclerion, Dr. Currie served as senior vice president, chief scientific officer and president of research and development at Ironwood from 2002 to April 2019. • Prior to joining Ironwood, Dr. Currie directed cardiovascular and central nervous system disease research as vice president of discovery research at Sepracor, Inc. and initiated, built and led discovery pharmacology and also served as director of arthritis and inflammation at Monsanto Company. • Dr. Currie currently serves on the board of directors of Antag Therapeutics ApS, Science Exchange, Inc. and Sea Pharmaceuticals, LLC, each of which is a privately held company. Dr. Currie also chairs the scientific advisory boards of Wild Bioscience Ltd. and Tisento Therapeutics, Inc. • Dr. Currie earned a B.S. in biology from the University of South Alabama and holds a Ph.D. in cell biology from the Bowman Gray School of Medicine of Wake Forest University. • We believe that Dr. Currie’s vast experience leading the research and development efforts of an international biotechnology company will prove instrumental in guiding us through the research and development of novel therapies. |
Who We Are
| ALEXANDER DENNER, Ph.D. Founding Partner and Chief Investment Officer, Sarissa Capital Management LP Age: 54 Director since 2020 Board Committees • Governance and Nominating Committee, Chair | • Dr. Denner is a founding partner and the chief investment officer of Sarissa Capital Management LP, or Sarissa, a registered investment advisor, where he has been since 2011. • Prior to joining Sarissa, Dr. Denner served as a senior managing director at Icahn Capital LP, an investment advisory firm, from 2006 to 2011. Prior to that, he served as a portfolio manager at Viking Global Investors, a private investment fund, and Morgan Stanley Investment Management, a global asset management firm. • Dr. Denner serves on the board of directors of Attralus, Inc., a privately held company. In the last five years, Dr. Denner has served as chair of the board of directors of The Medicines Company and Sarissa Capital Acquisition Corp., as well as a member of the board of directors of Biogen Inc. • Dr. Denner earned his B.S. in mechanical engineering from Massachusetts Institute of Technology, an M.S. and M.Phil. in mechanical engineering from Yale University and an interdisciplinary Ph.D. from Yale University. • Dr. Denner brings to the board significant experience overseeing the operations and research and development of healthcare companies and evaluating corporate governance matters. He also has extensive experience as an investor, particularly with respect to healthcare companies, and possesses broad healthcare industry knowledge. |
Who We Are
| ANDREW DREYFUS Former President and Chief Executive Officer for Blue Cross Blue Shield of Massachusetts Age: 65 Director since 2016 Board Committees • Compensation and HR Committee, Chair | • Mr. Dreyfus most recently served as president and chief executive officer for Blue Cross Blue Shield of Massachusetts, or BCBSMA, one of the largest Blue Cross Blue Shield insurance plans in the country, from 2010 to 2022. From 2005 to 2010, Mr. Dreyfus served as the executive vice president of healthcare services of BCBSMA. • Prior to joining BCBSMA, he served as the first president of the Blue Cross Blue Shield Foundation. Mr. Dreyfus also previously served as executive vice president of the Massachusetts Hospital Association and held a number of senior positions in Massachusetts state government, including undersecretary of consumer affairs and business regulation. • Mr. Dreyfus serves on the board of directors and as a member of the audit committee and the compensation and management development committee of Alto Neuroscience, Inc. (NYSE: ANRO), a public company. Mr. Dreyfus also serves on the board of directors of Octave Health Group Inc., a privately held company and the Joint Commission, the National Quality Forum and BCBSMA Foundation, all of which are non-profit organizations. He is a member of the advisory boards of Ariadne Labs, Vanna Health and the Massachusetts Coalition for Serious Illness Care. He previously served on the board of directors for BCBSMA, the Blue Cross Blue Shield Association and RIZE Massachusetts. • Mr. Dreyfus received a B.A. in English from Connecticut College. • Mr. Dreyfus brings to our board of directors significant expertise in the healthcare payer and reimbursement market, and broad management and executive leadership experience, providing valuable insight as we continue to develop and commercialize medicines in an evolving healthcare landscape. |
Who We Are
| JON DUANE Senior Partner Emeritus, McKinsey & Company Age: 65 Director since 2019 Board Committees • Governance and Nominating Committee • Compensation and HR Committee | • Mr. Duane is senior partner emeritus at McKinsey & Company, or McKinsey, an international management consulting company. Before his retirement in December 2017, Mr. Duane had served as a partner at McKinsey since 1992. • At McKinsey, Mr. Duane founded and led the firm’s biotech practice. In that role, Mr. Duane advised both private and public companies in the pharmaceutical, medical device and life science industries, as well as academic research centers, on various strategic initiatives. • Mr. Duane serves as the executive chair on the board of directors of Nashville Biosciences, LLC, a privately held company. • Mr. Duane graduated from Wesleyan University with a B.A. in government and received an M.B.A from Harvard Business School. • Mr. Duane brings to the board of directors significant experience advising academic research centers and companies across the life science and medical device industries. |
Who We Are
| MARLA KESSLER Former Chief Marketing Officer, Datavant, Inc. Age: 54 Director since 2019 Board Committees • Compensation and HR Committee | • Ms. Kessler most recently served as chief marketing officer of Datavant, Inc., or Datavant, a health IT company, from October 2022 to April 2024. Prior to joining Datavant, Ms. Kessler served as chief customer officer of Aetion, Inc., or Aetion, a health care technology company, from September 2021 to October 2022, and prior that, as an advisor to the chief executive officer of IQVIA Holdings Inc., or IQVIA (formerly IMS Health and Quintiles), a global analytics and technology company, from October 2020 to February 2021. Prior to that, Ms. Kessler had been the senior vice president for strategy, marketing and communications for IQVIA since October 2016. • Previously, Ms. Kessler served in various roles for IQVIA, including vice president for global services marketing and knowledge management from 2013 to 2016, regional leader of the IMS Consulting Group in Europe from 2011 to 2013, location manager for the London IMS Consulting Group from 2009 to 2011 and senior principal from 2008 to 2009. • Before joining IQVIA, Ms. Kessler led several marketing efforts for Pfizer Inc. from 2004 to 2007 and worked in consulting for McKinsey & Company from 1996 to 2004. • Ms. Kessler received a B.S. in economics from Arizona State University and an M.B.A. from the Fuqua School of Business at Duke University. • Ms. Kessler provides an important commercial perspective to our board of directors given her expertise in strategic marketing, evidence-based research and customer experience in the life science industry. |
Who We Are
| THOMAS McCOURT Chief Executive Officer, Ironwood Pharmaceuticals, Inc. Age: 66 Director since 2021 | • Mr. McCourt has served as our chief executive officer and member of the board of directors since June 2021 and had previously served as president and interim chief executive officer from March 2021 to June 2021 and as president from April 2019 to June 2021. Prior to April 2019, Mr. McCourt served as our senior vice president of marketing and sales and chief commercial officer since joining Ironwood in 2009. • Prior to joining Ironwood, Mr. McCourt led the U.S. brand team for denosumab at Amgen Inc. from 2008 to 2009. Prior to that, Mr. McCourt was with Novartis AG from 2001 to 2008, where he directed the launch and growth of ZELNORM™ for the treatment of patients with IBS-C and CIC and held a number of senior commercial roles, including vice president of strategic marketing and operations. • Mr. McCourt was also part of the founding team at Astra-Merck Inc., leading the development of the medical affairs and science liaison group and then serving as brand manager for PRILOSEC® and NEXIUM®. • Mr. McCourt serves on the board of directors and as a member of the compensation committee of Pliant Therapeutics, Inc. (Nasdaq: PLRX), a public company, and on the board of trustees for the American Society of Gastrointestinal Endoscopy (ASGE). Mr. McCourt previously served on the board of directors of Acceleron Pharma Inc., including as a member of the audit committee and the chair of the nominating and governance committee. • Mr. McCourt received a B.S. in pharmacy from the University of Wisconsin. • Given his role as our chief executive officer and his previous leadership roles at the company since joining in 2009, we believe Mr. McCourt brings unique and in-depth insight into the operations and management of the company, which together with his extensive commercial experience, his deep knowledge of GI, and his experience launching and achieving blockbuster status for LINZESS, are valuable to our board of directors. |
Who We Are
| JULIE McHUGH, CHAIR Former Chief Operating Officer, Endo Health Solutions, Inc. Age: 59 Director since 2014 Board Committees • Audit Committee • Governance and Nominating Committee | • Ms. McHugh most recently served as chief operating officer for Endo Health Solutions, Inc., or Endo, from 2010 through 2013, where she was responsible for the specialty pharmaceutical and generic drug businesses. • Prior to joining Endo, Ms. McHugh was the chief executive officer of Nora Therapeutics, Inc. • Before that she served as company group chair for the worldwide virology business unit of Johnson & Johnson, or J&J, and previously she was president of Centocor, Inc., a J&J subsidiary. While at J&J, Ms. McHugh oversaw the development and launches of several products, including Remicade® (infliximab) and she was responsible for oversight of a research and development portfolio including compounds targeting autoimmune diseases, HIV, hepatitis C, and tuberculosis. • Prior to joining Centocor, Inc., Ms. McHugh led marketing communications for gastrointestinal drug Prilosec® (omeprazole) at Astra-Merck Inc. • Ms. McHugh currently serves on the board of directors of Lantheus Holdings, Inc. (Nasdaq: LNTH), a public company, and Xellia Pharmaceuticals ApS, a privately held company. She also serves on the strategic advisory board for HealthCare Royalty Partners and the board of visitors for the Smeal College of Business of Pennsylvania State University. She previously served on the board of directors for Aerie Pharmaceuticals, Inc., Trevena, Inc., ViroPharma Inc., Epirus Biopharmaceuticals, Inc., Evelo Biosciences, Inc., the Biotechnology Industry Organization, the Pennsylvania Biotechnology Association and the New England Healthcare Institute. • Ms. McHugh received her M.B.A. degree from St. Joseph’s University and her B.S. degree from Pennsylvania State University. • Ms. McHugh’s experience as a chief executive officer and a chief operating officer at large multinational pharmaceutical companies makes her a valuable member of our board of directors. Her deep knowledge of Ironwood’s history and strategy and strong relationships with our senior leadership team also make her a valuable resource. |
Who We Are
| CATHERINE MOUKHEIBIR Former Chief Executive Officer, MedDay Pharmaceuticals Age: 64 Director since 2019 Board Committees • Audit Committee, Chair | • Ms. Moukheibir most recently served as chief executive officer of MedDay Pharmaceuticals, or MedDay, a biopharmaceutical company that focused on nervous system disorders, from July 2019 to January 2021. She was also the chair of the board of directors of MedDay from April 2016 to January 2021. • Prior to that, Ms. Moukheibir served as the senior advisor for finance and a member of the executive board of directors at Innate Pharma SA, an oncology company, from 2011 to 2016, and as the chief financial officer for Movetis N.V. from 2008 to 2010, when it was acquired. • Ms. Moukheibir previously served as the director of capital markets for Zeltia Group S.A. from 2001 to 2007. • Ms. Moukheibir currently serves on the board of directors of the following public companies: MoonLake Immunotherapeutics AG (Nasdaq: MLTX), Biotalys NV (EBR: BTLS) and Oxford Biomedica plc (LSE: OXB)(1). Ms. Moukheibir also serves on the board of directors of Asceneuron SA, Noema Pharma AG and CMR Surgical, all of which are privately held companies. She held past directorships on the boards of directors of Ablynx NV, Cerenis Therapeutics SA, Creabilis S.A., DNA Script SAS, GenKyoTex S.A., Kymab Group Limited, Orphazyme A/S and Zealand Pharma A/S. • Ms. Moukheibir has an M.A. in economics and an M.B.A. from Yale University. • Ms. Moukheibir’s long leadership career in the biopharmaceutical industry, as well as her deep background in international finance, provide her with valuable business and financial expertise in support of our corporate objectives. |
Who We Are
In March 2024, Ms. Moukheibir informed the board of directors of Oxford Biomedica plc, or Oxford, that she does not intend to stand for re-election at Oxford’s upcoming annual general meeting in June 2024.
Who We Are
| JAY SHEPARD Former President and Chief Executive Officer of Aravive, Inc. Age: 66 Director since 2020 Board Committees • Audit Committee | • Mr. Shepard is an advisor at Catalyst Pacific, a venture group focused on licensing drug programs and creating new companies in the U.S. and Japan. Mr. Shepard previously was president and chief executive officer of Aravive, Inc. (formerly Versartis, Inc.), a clinical-stage oncology company, from May 2015 to January 2020, when he retired. From 2013 to 2015, Mr. Shepard was executive chairman of Versartis, Inc. • From 2008 until May 2015, Mr. Shepard was an executive partner at Sofinnova Ventures, a venture capital firm focused on the healthcare industry. From 2010 to 2012, Mr. Shepard served as president and chief executive officer and was a member of the board of directors of NextWave Pharmaceuticals, Inc., a specialty pediatric pharmaceutical company. From 2005 to 2007, Mr. Shepard served as interim president and chief executive officer of Relypsa (Ilypsa, Inc.’s spin-out company, which was acquired by Galencia), a pharmaceutical company. Mr. Shepard was also vice president of commercial operations at Telik and oncology business unit head of Alza Pharmaceuticals (acquired by J&J). • Mr. Shepard has over 35 years of experience in the pharmaceutical, biotechnology and drug delivery arenas. Mr. Shepard has participated in or led over 16 product launches by preparing markets and establishing sales and marketing operations. • Mr. Shepard also currently serves on the board of directors of the following public companies: Inovio Pharmaceuticals, Inc. (Nasdaq: INO) and Esperion Therapeutics, Inc. (Nasdaq: ESPR). In addition, Mr. Shepard serves on the board of directors of Aculys Pharma, LLC, Cessation Therapeutics, Inc. and Pathalys Pharma, Inc., each of which is a privately held company. Mr. Shepard also serves as the chairman of the board of directors of the Christopher & Dana Reeve Foundation. • Mr. Shepard holds a B.S. in Business Administration from the University of Arizona. • Mr. Shepard brings deep expertise to our board of directors, as a recognized leader within the pharmaceutical industry, with nearly three decades of expertise as an accomplished public company CEO and senior executive. |
Director Compensation Table
Director Compensation Table The following table sets forth information regarding the compensation earned during the year ended December 31, 2023, by each of our directors who served in 2023, other than Mr. McCourt, who does not receive compensation for his service on our board of directors.
Director Compensation Table
| Name | Fees Earned or Paid in Cash ($) | All Other Stock Awards ($)(1) | Compensation ($) | Total ($) | | Mark Currie, Ph.D. | $60,000 | $240,710 | — | $300,710 | | Alexander Denner, Ph.D. | $59,976(2) | $240,710 | — | $300,686 | | Andrew Dreyfus | $70,000 | $240,710 | — | $310,710 | | Jon Duane | $65,000 | $240,710 | — | $305,710 | | Marla Kessler | $60,000 | $240,710 | — | $300,710 | | Julie McHugh | $95,000 | $240,710 | — | $335,710 | | Catherine Moukheibir | $69,978(3) | $240,710 | — | $310,688 | | Jay Shepard | $60,000 | $240,710 | — | $300,710 |
Director Compensation Table
(1) On June 20, 2023, each non-employee member of our board of directors received a restricted stock grant in the amount of 22,350 shares of our Class A common stock for service on our board of directors from the date of our 2023 annual meeting of stockholders to the date of our 2024 annual meeting of stockholders, which shares will vest in full on the date immediately preceding the date of our 2024 annual meeting of stockholders, subject to continued service on our board as of the vesting date. The number of shares subject to the restricted stock grant was determined by dividing (i) $250,000 by (ii) $11.19, which was the average closing price of our Class A common stock on the Nasdaq Global Select Market for the six months preceding the month of the 2023 annual meeting of stockholders. Each such award of restricted stock had a grant date fair value of $10.77 per share and was granted pursuant to the terms of our prior amended and restated Director Compensation Policy, which was in effect from January 1, 2023 to December 31, 2023, and our 2019 Equity Plan. As of December 31, 2023, each non-employee director held 22,350 restricted shares of Class A common stock as a result of this grant and held no other unvested equity awards. Amounts in the table represent the fair value of these restricted stock grants on the date of grant calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation, or ASC 718. For a discussion of the assumptions used in the valuation of awards made in 2023, see Note 13 to our consolidated financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K that we filed with the SEC on February 16, 2024. All values reported exclude the effects of potential forfeitures. (2) Dr. Denner elected to receive this annual retainer in unrestricted shares of our Class A common stock. Dr. Denner received a total of 5,942 shares of our Class A common stock for such service in 2023. (3) Ms. Moukheibir elected to receive this annual retainer in unrestricted shares of our Class A common stock. Ms. Moukheibir received a total of 6,933 shares of our Class A common stock for such service in 2023.
Goals and Accomplishments
| Company Goal | Partially Achieved | Target | Over Achieved | Results | | MAXIMIZE LINZESS (30%) | | | | | | LINZESS U.S. Net Sales | $1,022M | $1,051M | $>1,070M | $1,073M(1) | | Achieve U.S. FDA approval of sNDA for pediatric patients ages 6-17 years old with FC | Specific goals are not disclosed for competitive reasons | | | Above Target(2) | | Commercial launch target date of LINZESS for pediatric patients ages 6-17 years old with FC as measured by a launch scorecard | Specific goals are not disclosed for competitive reasons | | | Above Target(3) | | | (20%) | (30%) | (40%) | (40%) | | BUILD INNOVATIVE PIPELINE (30%) | | | | | | Secure 1 asset aligned with prioritized criteria | Specific goals are not disclosed for competitive reasons | | | Above Target(4) | | Achieve CNP-104 enrollment target | Specific goals are not disclosed for competitive reasons | | | Target(5) | | Achieve IW-3300 enrollment target | Specific goals are not disclosed for competitive reasons | | | Below Target(6) | | | (20%) | (30%) | (50%) | (35%) | | STRENGTHEN FINANCIAL PROFILE (35%) | | | | | | Adjusted EBITDA from organic business (excluding the impact of any corporate development transactions and costs associated with a potential CNP-104 option exercise) | $235M | $250M | $>260M | $268M(7) | | | (30%) | (35%) | (40%) | (40%) | | CREATE GREAT PLACE TO WORK (5%) | | | | | | Achieve a certain number of objectives on the corporate DEI scorecard | Committee judgment on actual performance | Specified Number | N/A | Target(8) | | Maintain confidence in Ironwood’s strategy and culture, measured by positive response rate range on annual employee engagement survey | Committee judgment on actual performance | >50% | N/A | Target(9) | | | | (5%) | | (5%) | | | | | TOTAL | 120% |
Goals and Accomplishments
Notes to 2023 Company Performance Targets and Results Table (1) Goal exceeded. LINZESS U.S. net sales were $1,073 million for the year ended December 31, 2023. LINZESS U.S. net sales are reported by our U.S. partner, AbbVie. (2) Goal exceeded. In June 2023, the U.S. FDA approved LINZESS as a once-daily treatment for pediatric patients ages 6-17 years old with functional constipation, making LINZESS the first and only FDA-approved prescription therapy for functional constipation in this patient population. Specific target thresholds are not disclosed for competitive reasons. (3) Goal exceeded. Specific details and target thresholds are not disclosed for competitive reasons. (4) Goal exceeded. In June 2023, we completed a tender offer to purchase 98% of the outstanding ordinary shares of VectivBio Holding AG. In December 2023, we completed a squeeze-out merger to acquire all remaining shares. Specific target thresholds are not disclosed for competitive reasons. (5) Goal achieved. Specific details and target thresholds are not disclosed for competitive reasons. (6) Goal was below target. Specific details and target thresholds are not disclosed for competitive reasons. (7) Goal exceeded. Our adjusted EBITDA, which was calculated by subtracting mark-to-market adjustments on derivatives related to Ironwood’s 2022 Convertible Notes, restructuring expenses, net interest expense, income taxes, depreciation and amortization, and acquisition-related costs, from GAAP net income, was ($884.8) million for the year ended December 31, 2023. When excluding from adjusted EBITDA the impact of corporate development activities in 2023, which include all profit and loss incurred by VectivBio subsequent to the VectivBio acquisition, and the payment recognized in the second quarter of 2023 in connection with the amendment of the COUR Collaboration Agreement, our adjusted EBITDA from our organic business was $267.6 million for the year ended December 31, 2023. (8) Goal achieved. Goal achieved. In support of the 2023 corporate goals identified above, our compensation and HR committee assigned a specific subset of individual goals for each of our named executive officers as described below.
Goals and Accomplishments
In early 2024, Mr. McCourt evaluated the individual performance in 2023 of each of the named executive officers (other than himself) and provided feedback and made recommendations to our compensation and HR committee. The compensation and HR committee then determined the named executive officers’ compensation, taking into account Ironwood’s level of achievement of its 2023 corporate goals as determined by our board, that each named executive officer exceeded or achieved performance expectations for 2023, and peer group and other market data from the competitive assessment undertaken by our compensation and HR committee’s independent compensation consultant, Alpine Rewards, LLC, or Alpine, as discussed below. Additional information on the basis for decisions about 2024 compensation relating to our named executive officers is available throughout this section and elsewhere in this proxy statement under the captions Role of the Compensation and HR Committee and Role of the Compensation Consultant: Benchmarking and Peer Group Analysis.
2023 Base Salary
2023 Base Salary Base salaries are determined at an executive’s commencement of employment and are generally re-evaluated annually and adjusted, if warranted, to realign salaries with market levels or in connection with promotions or other changes in role and to reflect the performance of the named executive officer. In determining whether to adjust or recommend an adjustment to a named executive officer’s base salary, our compensation and HR committee takes into consideration factors such as our corporate performance in prior years, general economic factors and compensation parity among our named executive officers, as well as the abilities, performance and experience of the named executive officer. Our compensation and HR committee also reviews our named executive officers’ past compensation at the company and market data. In addition, our compensation and HR committee recommends, and our board approves, compensation determinations for our chief executive officer. Please see Role of the Compensation and HR Committee and Role of the Compensation Consultant: Benchmarking and Peer Group Analysis for further information. In February 2023, our compensation and HR committee reviewed and approved 2023 base salaries for our named executive officers for 2023, except for Mr. McCourt whose base salary is reviewed and recommended by our compensation and HR committee and approved by the independent directors of our board of directors. In March 2023, following a recommendation by our compensation and HR committee, the independent directors of our board of directors approved Mr. McCourt’s 2023 base salary. The increases in base salary for Messrs. McCourt, Emany, Davis and Minardo and Dr. Shetzline were based on our compensation and HR committee’s (and the board of directors’, in the case of Mr. McCourt) determination that each executive officer achieved or exceeded substantially all of his respective individual goals for 2022. In May 2023, the compensation and HR committee approved an additional increase to Mr. Emany’s 2023 base salary from $520,000 to $545,000 in recognition of the additional workload Mr. Emany would be assuming in connection with the elimination of the company’s chief operating officer role. The base salary determinations also took into account peer group and other market data from the competitive assessment conducted by Aon, our compensation consultant at the time, and discussed in more detail below. Base salary information for 2023 compared to base salary information for 2022 for each of our named executive officers is as follows:
Annual Cash Incentive Program for 2023 Performance
Annual Cash Incentive Program for 2023 Performance Our annual cash incentive program, or ACIP or cash bonus award, is designed to reward the achievement of our annual corporate goals and individual goals. The program is also intended to foster and support our performance-driven culture by setting clear, high-value goals, rewarding outstanding performers and making sure our employees know clearly that we value their contributions. Each target bonus award, expressed as a percentage of an executive’s base salary, is determined annually and is based on the extent to which we achieved our corporate goals for the preceding year, the executive’s individual performance in that year against his or her individual goals as well as peer group and other market data. Target bonus percentages for 2023 for each of our named executive officers, which were unchanged from the respective target bonus percentages for 2022, are as follows:
Annual Cash Incentive Program for 2023 Performance
| Named Executive Officer | 2023 Target Bonus (as a % of base salary) | | Thomas McCourt | 75% | | Sravan Emany | 50% | | Andrew Davis | 50% | | John Minardo | 45% | | Michael Shetzline, M.D., Ph.D. | 45% |
Annual Cash Incentive Program for 2023 Performance
We believe that these target bonus percentages align the target total cash compensation, as defined below, of our named executive officers with that of our peers, place appropriate emphasis on the achievement of our annual performance objectives and facilitate recruiting, retaining, and motivating our executive officers. For each of our named executive officers, other than our chief executive officer, 70% of each 2023 cash bonus award was based solely on the achievement of our corporate goals and 30% was based on the named executive officer’s achievement of his individual goals as described above, and our corporate goals. In recommending for approval by the board the amount of Mr. McCourt’s 2023 cash bonus, our compensation and HR committee determined to set Mr. McCourt’s individual performance in 2023 to be equal to the company’s performance factor of 120%. The board reviewed and followed this recommendation in approving Mr. McCourt’s cash bonus award for 2023 performance. The following table summarizes the calculation of our named executive officers’ cash bonus awards, other than for our chief executive officer. Mr. McCourt’s 2023 cash bonus was calculated by multiplying his target bonus percentage (75%) by the corporate performance factor, as noted above.
Annual Cash Incentive Program for 2023 Performance
| Component Calculation | | | | | | | | | | | Company Performance Only Component (Weighted 70%) | 70% Weighting | × | Target Bonus | × | Corporate Performance Achievement Multiplier | | | = | Company Performance Only Component Payout | | | | | | | | | | | + | | Company and Individual Performance Component (Weighted 30%) | 30% Weighting | × | Target Bonus | × | Corporate Performance Achievement Multiplier | × | Individual Performance Achievement Multiplier | = | Company and Individual Performance Component Payout | | | | | | | | | | | Total Annual Bonus Payout |
Annual Cash Incentive Program for 2023 Performance
This approach was intended to closely align cash bonus award payouts with the achievement of our corporate goals, while taking into account individual performance (or, in the case of Mr. McCourt, equating company performance with individual performance) and making bonus determinations in a transparent way. As described above, the company performance achievement multiplier for 2023 was 120%. In February 2024, our compensation and HR committee, determined that each of our named executive officers (other than Mr. McCourt, whose individual performance was equated with company performance) achieved or exceeded pre-established individual goals for 2023, resulting in the following individual performance achievement multipliers and bonus ratios to target bonus percentage (after applying the 70%/30% weighting and taking into account the company performance achievement multiplier of 120%).The compensation and HR committee then reviewed and approved (or, in the case of Mr. McCourt, recommended that the board approve, which recommendation was followed by the board) the following bonuses for 2023 performance for our named executive officers:
Annual Cash Incentive Program for 2023 Performance
| Named Executive Officer | Individual Performance | Actual Bonus to Target Bonus Ratio | Annual Cash Incentive Program for 2023 Performance | | Thomas McCourt | 120%(1) | 120% | $750,780 | | Sravan Emany | 135% | 133% | $361,335 | | Andrew Davis | 140% | 134% | $322,560 | | John Minardo | 110% | 124% | $284,929 | | Michael Shetzline, M.D., Ph.D. | 125% | 129% | $309,733 |
Annual Cash Incentive Program for 2023 Performance
(1) As described above, our compensation and HR committee also recommended, and our board determined that Mr. McCourt’s individual performance achievement multiplier was 120% on the basis that such multiplier was equal to the corporate performance achievement multiplier of 120%.
2023 Long-Term Equity Awards
2023 Long-Term Equity Awards Long-term equity incentive compensation granted in 2023 represented, on average, approximately 70% of each named executive officer’s total compensation for the year (based on the grant date fair value of equity awards, with performance-based restricted stock unit, or PSU, awards measured at target). We believe this emphasis on equity, and particularly performance-based equity, strongly reinforces the principle of “pay for performance” and closely ties our executives’ pay outcomes to stockholder value creation. We also use equity awards as our incentive vehicle for long-term compensation to attract, reward and retain our named executive officers and to align the interests of our named executive officers with those of stockholders. We typically grant equity awards in the first quarter of each year based on our performance in the prior year. Throughout the year, our compensation and HR committee may award additional equity grants as circumstances warrant. Our compensation and HR committee does not apply a rigid formula in allocating equity awards to our named executive officers as a group or to any particular named executive officer, but for 2023 set an equity pool based on peer group and other market data from a competitive assessment prepared by its compensation consultant as discussed below. In addition to peer group and market data, our compensation and HR committee also considers other factors, including input from its compensation consultant and the amount of unvested equity held by a named executive officer, in determining the size of individual equity awards.
2023 Annual Equity Awards
2023 Annual Equity Awards In early 2023, the compensation and HR committee determined that the annual long-term equity incentive compensation awards for our named executive officers should consist of an approximately even number of PSUs and RSUs. For PSUs, the compensation and HR committee further determined that performance under our PSU awards should be measured against total shareholder return, or TSR, using absolute TSR (50%), or aTSR, and relative TSR (50%), or rTSR, performance metrics in order to tie further the compensation of our named executive officers to stockholder value creation and hold our executives accountable for our stock price performance. The compensation and HR committee further determined that the three-year performance period for the 2023 PSUs should start on March 1, 2023 and end on February 28, 2026. This change to how the performance period is measured (relative to PSUs granted in prior years, in which the performance period aligned with the calendar year) will enable both performance metrics to take into account current financial information through the most recent fiscal year-end, as well as any changes in financial guidance that may have affected the stock price of the company and the rTSR peer group companies throughout the performance period. The 2023 PSUs use the following metrics, weighting and vesting opportunity:
2023 Annual Equity Awards
| Performance Metric | Weight | Performance Period | Threshold | Target | Above Target | Maximum | | 2023 aTSR PSUs | 50% | Three years ending February 28, 2026 | 50% attainment: 30 calendar-day average closing share price of $13.23 or above | 100% attainment: 30 calendar-day average closing share price of $13.80 or above | 200% attainment: 30 calendar-day average closing share price of $15.53 or above | 400% attainment: 30 calendar-day average closing share price of $17.25 or above | | 2023 rTSR PSUs(1) | 50% | Three years ending February 28, 2026 | 50% attainment: rTSR at the 25th percentile compared to rTSR peer group through February 2026 | 100% attainment: rTSR at the 50th percentile compared to rTSR peer group through February 2026 | N/A | 200% attainment: rTSR at the 75th percentile compared to rTSR peer group through February 2026 |
2023 Annual Equity Awards
(1) If the TSR percentile rank falls between Threshold, Target or Maximum goals, the percentage of rTSR PSUs earned shall be interpolated on a straight-line basis. Attainment for the 2023 rTSR PSUs is capped at 100% where the company’s TSR is negative. At the time they were designated, the peer group companies selected for the 2023 rTSR PSUs consisted of commercial pharmaceutical and biotechnology companies that ranged between $750 million and $10 billion in market capitalization; Ironwood’s 30-day market value capitalization as of December 31, 2022, was at the 47th percentile relative to this custom peer group. Our compensation and HR committee approved the following custom rTSR measurement peer group for the 2023 rTSR PSUs, which included all of our executive compensation peers:
2023 Annual Equity Awards
| ACADIA Pharmaceuticals, Inc. (Nasdaq: ACAD) | Insmed, Inc. (Nasdaq: INSM) | | ADMA Biologics (Nasdaq: ADMA) | Intercept Pharmaceuticals, Inc. (Nasdaq: ICPT) | | Alkermes plc (Nasdaq: ALKS) | Ionis Pharmaceuticals, Inc. (Nasdaq: IONS) | | Amicus Therapeutics, Inc. (Nasdaq: FOLD) | Kiniksa Pharmaceuticals, Ltd. (Nasdaq: KNSA) | | Apellis Pharmaceuticals, Inc. (Nasdaq: APLS) | Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) | | Arcus Biosciences, Inc. (Nasdaq: RCUS) | Myriad Genetics, Inc. (Nasdaq: MYGN) | | Arrowhead Pharmaceuticals, Inc. (Nasdaq: ARWR) | Natera, Inc. (Nasdaq: NTRA) | | Avid Bioservices, Inc. (Nasdaq: CDMO) | Novavax, Inc. (Nasdaq: NVAX) | | BioCryst Pharmaceuticals, Inc. (Nasdaq: BCRX) | Organogenesis Holdings Inc. (Nasdaq: ORGO) | | Blueprint Medicines Corporation (Nasdaq: BPMC) | Pacira BioSciences, Inc. (Nasdaq: PCRX) | | Catalyst Pharmaceuticals, Inc. (Nasdaq: CPRX) | PTC Therapeutics, Inc. (Nasdaq: PTCT) | | Coherus BioSciences, Inc. (Nasdaq: CHRS) | REGENXBIO Inc. (Nasdaq: RGNX) | | Corcept Therapeutics Incorporated (Nasdaq: CORT) | Supernus Pharmaceuticals, Inc. (Nasdaq: SUPN) | | Cytokinetics, Inc. (Nasdaq: CYTK) | Syndax Pharmaceuticals, Inc. (Nasdaq: SNDX) | | Deciphera Pharmaceuticals (Nasdaq: DCPH) | Travere Therapeutics, Inc. (Nasdaq: TVTX) | | Denali Therapeutics, Inc. (Nasdaq: DNLI) | Vanda Pharmaceuticals Inc. (Nasdaq: VNDA) | | Dynavax Technologies Corporation (Nasdaq: DVAX) | Veracyte, Inc. (Nasdaq: VCYT) | | Exact Sciences Corporation (Nasdaq: EXAS) | Vericel Corporation (Nasdaq: VCEL) | | Exelixis, Inc. (Nasdaq: EXEL) | Vir Biotechnology, Inc. (Nasdaq: VIR) | | FibroGen, Inc. (Nasdaq: FGEN) | Xencor Inc. (Nasdaq: XNCR) | | Halozyme Therapeutics, Inc. (Nasdaq: HALO) | |
2023 Annual Equity Awards
In March 2023, our named executive officers were granted RSUs and PSUs, in each case under our 2019 Plan. RSUs granted in 2023, other than for our chief executive officer, vest as to 25% of the underlying shares on each approximate anniversary of the grant date of the award, subject to continued employment on each vesting date, which is the vesting schedule typically used for RSU awards granted to employees. RSUs granted in 2023 to Mr. McCourt vest as to 33.3% of the underlying shares on each approximate anniversary of the grant date of the award, subject to his continued employment on each vesting date. As described above, the 2023 PSU awards are subject to aTSR and rTSR performance goals, and are measured over a three-year performance period ending February 28, 2026. The RSUs and PSUs granted to our named executive officers in March 2023 were as follows:
2023 Annual Equity Awards
| Named Executive Officer | 2023 Annual PSU Grant (# of Shares of Class A common stock Subject to PSUs) (at target) | 2023 Annual RSU Grant (# of Shares of Class A common stock Subject to RSUs) | | Thomas McCourt | 240,594 | 240,595 | | Sravan Emany | 74,235 | 74,236 | | Andrew Davis | 74,325 | 74,236 | | John Minardo | 65,502 | 65,502 | | Michael Shetzline, M.D., Ph.D. | 69,869 | 69,869 |
2023 Annual Equity Awards
In making its determinations with respect to the size of the equity awards granted to each of our named executive officers, our compensation and HR committee took into account peer group and other market data from the Aon competitive assessment discussed below, as well as other factors including each executive’s current equity holdings, expected future contributions and retention. In February and March 2024, our compensation and HR committee certified that, with respect to the 2023 aTSR PSUs, the achievement of the “threshold” and “target” company share price targets, as specified in the 2023 PSUs metrics table above, were satisfied, resulting in 50% and 100% attainment, respectively, of the 2023 aTSR PSUs performance metric. Additional 2023 aTSR PSUs may vest upon the achievement of the additional stock price vesting targets specified above during the performance period ending February 28, 2026.
2021 rTSR PSUs Payout
2021 rTSR PSUs Payout In early 2021, our compensation and HR committee chose rTSR performance as the sole PSU performance metric in our 2021 executive equity compensation program to further tie the compensation of our named executive officers to stockholder value, as described in our 2022 proxy statement filed with the SEC on April 21, 2022. The 2021 rTSR PSUs had the following metrics and vesting opportunities:
2021 rTSR PSUs Payout
| Performance Metric | Performance Period | Threshold Goals (50% attainment) | Target Goals (100% attainment) | Stretch Goals (200% attainment) | | 2021 rTSR PSUs | Three years ending December 31, 2023 | rTSR at the 25th percentile compared to rTSR peer group through 2023 | rTSR at the 50th percentile compared to rTSR peer group through 2023 | rTSR at the 75th percentile compared to rTSR peer group through 2023(1) |
2021 rTSR PSUs Payout
(1) Attainment for the 2021 rTSR PSUs is capped at 100% where the company’s TSR is negative. In January 2024, our compensation and HR committee certified that, with respect to the 2021 rTSR PSUs, the achievement of the rTSR percentile rank compared to the rTSR peer group for the performance period, which ended on December 31, 2023, was 72%, resulting in a 100% attainment of this performance metric, since the company’s total stockholder return was negative over the three-year performance period.
Executive Severance Agreements and Benefits in the Event of a Change of Control
Executive Severance Agreements and Benefits in the Event of a Change of Control The severance arrangements that we have with our named executive officers, as well as other benefits provided in the event of a change of control, are described elsewhere in this proxy statement under the captions Named Executive Officer Severance Arrangements and Benefits in the Event of a Change of Control and Potential Payments Upon Termination or Change of Control. Severance benefits are only payable if the named executive officer has complied with all of our rules and policies, has executed a separation agreement that includes a release of claims and complies with his or her post-employment nondisclosure, noncompetition and non-solicitation obligations. We believe that offering these payments and benefits assists us in recruiting, retaining and motivating executive officers, facilitates the operation of our business, allows our named executive officers to better focus their time, attention and capabilities on our business, and provides for a clear and consistent approach to managing departures with mutually understood separation benefits.
2024 Annual Equity Awards
2024 Annual Equity Awards In early February 2024, the compensation and HR committee again determined that the annual long-term equity incentive compensation awards for our named executive officers should consist of an approximately even number of PSUs and RSUs. For PSUs, the compensation and HR committee further determined that performance under our PSU awards should again be measured against both an aTSR (50%) and an rTSR performance metric (50%) in order to continue to tie the compensation of our named executive officers to stockholder value creation and hold our executives accountable for our stock price performance. The compensation and HR committee further determined that the three-year performance period for the 2024 PSUs should start on March 1, 2024 and end on February 28, 2027, similar to the approach it took in 2023. This approach will enable both performance metrics to take into account current financial information through the most recent fiscal year-end, as well as any changes in financial guidance that may have affected the stock price of the company and the rTSR peer group companies throughout the performance period. The 2024 PSUs use the following metrics, weighting and vesting opportunity:
2024 Annual Equity Awards
| Performance Metric | Weight | Performance Period | Threshold | Target | Above Target | Maximum | | 2024 aTSR PSUs | 50% | Three years ending February 28, 2027 | 50% attainment: 30 calendar-day average closing share price of $16.38 or above | 100% attainment: 30 calendar-day average closing share price of $17.09 or above | 200% attainment: 30 calendar-day average closing share price of $19.22 or above | 400% attainment: 30 calendar-day average closing share price of $21.36 or above | | 2024 rTSR PSUs(1) | 50% | Three years ending February 28, 2027 | 50% attainment: rTSR at the 25th percentile compared to rTSR peer group through February 2027 | 100% attainment: rTSR at the 50th percentile compared to rTSR peer group through February 2027 | N/A | 200% attainment: rTSR at the 75th percentile compared to rTSR peer group through February 2027 |
2024 Annual Equity Awards
(1) If the TSR percentile rank falls between Threshold, Target or Maximum goals, the percentage of rTSR PSUs earned shall be interpolated on a straight-line basis. Attainment for the 2024 rTSR PSUs is capped at 100% where the company’s TSR is negative. At the time they were designated, the peer group companies selected for the 2024 rTSR PSUs consisted of commercial pharmaceutical and biotechnology companies that ranged between $500 million and $15 billion in market capitalization; Ironwood’s 30-day average market value capitalization as of December 31, 2023 was at the 44th percentile relative to this custom peer group. Our compensation and HR committee approved the following custom rTSR measurement peer group for the 2024 rTSR PSUs, which included all of our executive compensation peers:
2024 Annual Equity Awards
| ACADIA Pharmaceuticals, Inc. (Nasdaq: ACAD) | Krystal Biotech, Inc. (Nasdaq: KRYS) | | ADMA Biologics, Inc. (Nasdaq: ADMA) | Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) | | Agios Pharmaceuticals, Inc. (Nasdaq: AGIO) | MacroGenics, Inc. (Nasdaq: MGNX) | | Alkermes plc (Nasdaq: ALKS) | MannKind Corporation (Nasdaq: MNKD) | | Amicus Therapeutics, Inc. (Nasdaq: FOLD) | Mirati Therapeutics, Inc. (Nasdaq: MRTX) | | Apellis Pharmaceuticals, Inc. (Nasdaq: APLS) | Mirum Pharmaceuticals, Inc. (Nasdaq: MIRM) | | Ardelyx, Inc. (Nasdaq: ARDX) | Neurocrine Biosciences, Inc. (Nasdaq: NBIX) | | BioCryst Pharmaceuticals, Inc. (Nasdaq: BCRX) | Organogenesis Holdings Inc.(Nasdaq: ORGO) | | Blueprint Medicines Corporation (Nasdaq: BPMC) | Pacira BioSciences, Inc. (Nasdaq: PCRX) | | Catalyst Pharmaceuticals, Inc. (Nasdaq: CPRX) | PTC Therapeutics, Inc. (Nasdaq: PTCT) | | Coherus BioSciences, Inc. (Nasdaq: CHRS) | Rhythm Pharmaceuticals, Inc. (Nasdaq: RYTM) | | Corcept Therapeutics Incorporated (Nasdaq: CORT) | Sage Therapeutics, Inc. (Nasdaq: SAGE) | | Deciphera Pharmaceuticals, Inc. (Nasdaq: DCPH) | Sarepta Therapeutics, Inc. (Nasdaq: SRPT) | | Dynavax Technologies Corporation (Nasdaq: DVAX) | Supernus Pharmaceuticals, Inc. (Nasdaq: SUPN) | | Exelixis, Inc. (Nasdaq: EXEL) | TG Therapeutics, Inc. (Nasdaq: TGTX) | | Halozyme Therapeutics, Inc. (Nasdaq: HALO) | Travere Therapeutics, Inc. (Nasdaq: TVTX) | | ImmunoGen, Inc. (Nasdaq: IMGN) | Ultragenyx Pharmaceutical Inc. (Nasdaq: RARE) | | Incyte Corporation (Nasdaq: INCY) | United Therapeutics Corporation (Nasdaq: UTHR) | | Insmed Incorporated (Nasdaq: INSM) | Vanda Pharmaceuticals Inc. (Nasdaq: VNDA) | | Ionis Pharmaceuticals, Inc. (Nasdaq: IONS) | Vericel Corporation (Nasdaq: VCEL) |
2024 Annual Equity Awards
In February 2024, our named executive officers, other than our chief executive officer, were granted RSUs and PSUs, in each case under our Amended 2019 Plan. In March 2024, our chief executive officer was granted RSUs and PSUs, in each case under our Amended 2019 Plan. RSUs granted in 2024, other than for our chief executive officer, vest as to 25% of the underlying shares on each approximate anniversary of the grant date of the award, subject to continued employment on each vesting date, which is the vesting schedule typically used for RSU awards granted to employees. RSUs granted in 2024 for Mr. McCourt vest as to 33.3% of the underlying shares on each approximate anniversary of the grant date of the award, subject to his continued employment on each vesting date. As described above, the 2024 PSU awards are subject to aTSR and rTSR performance goals, and are measured over a three-year performance period ending February 28, 2027. The RSUs and PSUs granted to our named executive officers in either February or March of 2024, as applicable, were as follows:
2024 Annual Equity Awards
| Named Executive Officer | 2024 Annual PSU Grant (# of Shares of Class A common stock Subject to PSUs) (at target) | 2024 Annual RSU Grant (# of Shares of Class A common stock Subject to RSUs) | | Thomas McCourt | 264,876 | 264,876 | | Sravan Emany | 65,312 | 65,312 | | Andrew Davis | 65,312 | 65,312 | | John Minardo | 54,426 | 54,427 | | Michael Shetzline, M.D., Ph.D. | 54,426 | 54,427 |
Executive Compensation Governance
Executive Compensation Governance Highlighted procedures and tools that we use to ensure the effective governance of our compensation plans and decisions include: • our compensation and HR committee has the authority to hire independent counsel, compensation consultants and other advisors; • our compensation and HR committee conducts a regular review and assessment of risk as it relates to our compensation policies and practices; • as part of our insider trading prevention policy, our executive officers and directors are prohibited from engaging in any hedging or monetization transactions with respect to our securities, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds; • other than our broad-based benefits, including health, transportation, remote work and well-being stipends and a 401(k) plan that we make available to our U.S.-based employees, we offer limited perquisites, as described herein; • our executive severance agreements (i) do not provide for tax gross-ups and (ii) contain double-trigger requirements for equity acceleration and other benefits in the event of a change of control; • eight of our nine directors are independent, including all members of our compensation and HR committee, and we have instituted stock ownership guidelines that require directors to accumulate and continuously hold a specified amount of our Class A common stock (see Director Stock Ownership Guidelines elsewhere in this proxy statement for additional information); • we have instituted executive stock ownership guidelines that require executive officers to accumulate and continuously hold a specified amount of our Class A common stock (see Executive Officer Stock Ownership Guidelines elsewhere in this proxy statement for additional information); and • we adopted a new clawback policy in accordance with the requirements of the Dodd-Frank Act, final SEC rules and applicable Nasdaq listing standards effective October 2023. The clawback policy requires the clawback of erroneously awarded incentive-based compensation of former or current executive officers awarded during the three-year period preceding the date on which the company was required to prepare an accounting restatement due to the material noncompliance of the company with any financial reporting requirement under the securities laws. There is no fault or misconduct required to trigger a clawback and we will not indemnify any former or current executive officers against the loss of any erroneously awarded compensation that is recouped pursuant to the terms of the clawback policy, or any claims relating to our enforcement of our rights under the clawback policy.
Role of the Compensation Consultant: Benchmarking and Peer Group Analysis
Role of the Compensation Consultant: Benchmarking and Peer Group Analysis Our compensation and HR committee has the authority to select and retain independent advisors and consultants to assist it with carrying out its responsibilities, and we are required to pay any related expenses approved by the committee. In 2023, our compensation and HR committee exercised such authority and engaged Aon as its compensation consultant from January until August and replaced Aon with Alpine from September through December. Alpine was selected based upon its reputation and experience as a compensation consultant and in its work with companies similar to Ironwood. Each of Aon and Alpine, at each compensation consultants respective time, reported directly to our compensation and HR committee throughout the period of each compensation consultants engagement. Other than the purchase of certain benefits surveys, director and employee compensation benchmarking data from Aon and Alpine in 2023 and certain other accounting and consulting services requested by the company related to equity plan matters, including forfeiture rate analysis, PSU award design, and 2023 rTSR PSU and Pay versus Performance valuations, Aon and Alpine did not provide us with services in 2023 other than those requested by our compensation and HR committee and the review of this Compensation Discussion and Analysis for conformance with best practices. Based on the scope of our compensation and HR committee’s engagements with both Aon and Alpine, it was determined that neither Aon nor Alpine had a conflict of interest in their respective roles as compensation consultant under applicable rules for the period of their engagement. In order to assist our compensation and HR committee in setting 2023 compensation, Aon conducted competitive assessments of 2022 target compensation for our named executive officers, with a focus on the following components of our named executive officer compensation: • base salary; • target total cash compensation (which is base salary plus the target bonus); • long-term equity incentives (which are valued based on grant date fair value); and target total direct compensation (which is target total cash compensation plus the grant date value of the most recent long-term incentive grant). In conducting this assessment, Aon analyzed the components of our named executive officer compensation listed above, in each case measured against the 25th, 50th and 75th percentiles of our executive compensation peer group. Our peer group is reviewed at least annually by our compensation and HR committee. In setting our peer group, our compensation and HR committee applies a qualitative lens to help focus the potential group on the companies with which we are competing for talent. Our compensation and HR committee first identifies a potential pool of peer companies from a number of sources, including the companies listing Ironwood in their peer groups and the other companies listed in such peer companies’ peer groups, as well as companies included in third party peer group assessments. Our compensation and HR committee then considers certain size filters including market capitalization, revenue, and number of employees, as well as certain business model filters including commercial focus, and growth. The peer group that Aon proposed and that the compensation and HR committee used as a reference point in connection with 2023 compensation decisions is composed of the following 17 companies, which at the time they were designated as our peer group had a median 30-day average market capitalization of approximately $2.1 billion, median revenue of approximately $380 million, a median of 495 employees, and a commercial drug or drug candidate in later stage development:
Role of the Compensation Consultant: Benchmarking and Peer Group Analysis
| ACADIA Pharmaceuticals, Inc. (Nasdaq: ACAD) | Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) | | Alkermes plc (Nasdaq: ALKS) | Organogenesis Holdings Inc. (Nasdaq: ORGO) | | Amicus Therapeutics, Inc. (Nasdaq: FOLD) | Pacira BioSciences, Inc. (Nasdaq: PCRX) | | Dynavax Technologies Corporation (Nasdaq: DVAX) | PTC Therapeutics, Inc. (Nasdaq: PTCT) | | Blueprint Medicines Corporation (Nasdaq: BPMC) | Radius Health, Inc. (Nasdaq: RDUS) | | Coherus BioSciences, Inc. (Nasdaq: CHRS) | Supernus Pharmaceuticals, Inc. (Nasdaq: SUPN) | | Corcept Therapeutics Incorporated (Nasdaq: CORT) | Vanda Pharmaceuticals Inc. (Nasdaq: VNDA) | | Halozyme Therapeutics, Inc. (Nasdaq: HALO) | Ultragenyx Pharmaceutical Inc. (Nasdaq: RARE) | | Intercept Pharmaceuticals, Inc. (Nasdaq: ICPT) | |
Role of the Compensation Consultant: Benchmarking and Peer Group Analysis
In assisting our compensation and HR committee in setting 2023 compensation, Aon presented proxy peer data as well as results from the Radford Global Life Sciences Survey, or Radford Survey, which was comprised of companies that represent a broader market perspective and similar employee population to us, and a Market Composite, which combined the peer group data and data from the Radford Survey by weighting each source equally. Although this competitive assessment was not used to mandate any specific compensation decisions, our compensation and HR committee considered the results of this assessment when making base salary, cash bonus and long-term equity incentive award determinations with respect to our named executive officers in early 2023. In October 2023, our compensation and HR committee approved a new peer group, which Alpine used as a reference point in advising our compensation and HR committee regarding compensation decisions made beginning in the fourth quarter of 2023. Alpine recommended that five companies from our existing peer group be removed because they either no longer met the revenue screening criterium (Coherus BioSciences, Inc., Organogenesis Holdings Inc. and Vanda Pharmaceuticals, Inc.), or had been, or were in the process of being acquired (Intercept Pharmaceuticals, Inc. and Radius Health Inc.) and identified five potential companies (Ardelyx, Inc., BioCryst Pharmaceuticals, Inc., Insmed, Inc., Mirum Pharmaceuticals, Inc. and Travere Therapeutics, Inc.), to replace the five companies that were recommended to be removed from the prior peer group. This updated peer group is comprised of the following 17 companies, which at the time of approval by our compensation and HR committee had a median 30-day average market capitalization of approximately $1.5 billion, median revenue of approximately $427 million, a median of 250 employees and a commercial drug or drug candidate in later stage development:
Role of the Compensation Consultant: Benchmarking and Peer Group Analysis
| ACADIA Pharmaceuticals, Inc. (Nasdaq: ACAD) | Insmed, Inc. (Nasdaq: INSM) | | Alkermes plc (Nasdaq: ALKS) | Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) | | Amicus Therapeutics, Inc. (Nasdaq: FOLD) | Mirum Pharmaceuticals, Inc. (Nasdaq: MIRM) | | Ardelyx, Inc. (Nasdaq: ARDX) | Pacira BioSciences, Inc. (Nasdaq: PCRX) | | BioCryst Pharmaceuticals, Inc. (Nasdaq: BCRX) | PTC Therapeutics, Inc. (Nasdaq: PTCT) | | Blueprint Medicines Corporation (Nasdaq: BPMC) | Supernus Pharmaceuticals, Inc. (Nasdaq: SUPN) | | Corcept Therapeutics Incorporated (Nasdaq: CORT) | Travere Therapeutics, Inc. (Nasdaq: TVTX) | | Dynavax Technologies Corporation (Nasdaq: DVAX) | Ultragenyx Pharmaceutical Inc. (Nasdaq: RARE) | | Halozyme Therapeutics, Inc. (Nasdaq: HALO) | |
Executive Compensation Risk Assessment
Executive Compensation Risk Assessment Our compensation and HR committee engaged Alpine to conduct a formal compensation risk assessment in December 2023. The compensation and HR committee then reviewed our 2023 compensation policies as generally applicable to our employees and determined that our policies did not encourage excessive and unnecessary risk-taking, and that the level of risk that they did encourage was not reasonably likely to have a material adverse effect on the company. Our compensation and HR committee considered the following, among other factors, in reviewing our compensation policies related to 2023 compensation: • our use of different types of compensation vehicles provided a balance of long and short-term incentives with fixed and variable components; • we granted equity-based awards consisting of a mixed balance of time-based vesting and performance-based awards, which encouraged participants to look to long-term appreciation in equity values; • our annual bonus determinations for each employee were dependent on achievement of a diverse set of company-level goals, which we believe promoted long-term value; and our system of internal control over financial reporting and code of business conduct and ethics, among other things, reduced the likelihood of manipulation of our financial performance to enhance payments under any of our incentive plans.
Summary Compensation Table
Summary Compensation Table The following table sets forth information regarding the compensation paid or accrued to, or earned by, each of our named executive officers during the years ended December 31, 2023, 2022 and 2021, or such shorter period of the named executive officer’s service.
Summary Compensation Table
| Name and Principal Position* | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | | Thomas McCourt Chief Executive Officer | 2023 | 833,668 | — | 5,974,255(4) | — | 750,780 | 24,567 | 7,583,270 | | | 2022 | 805,404 | 143,300 | 6,473,069 | — | 453,375 | 18,118 | 7,893,266 | | | 2021 | 732,053 | 143,300 | 7,236,498 | — | 680,063 | 18,090 | 8,810,004 | | Sravan Emany Senior Vice President, Chief Financial Officer | 2023 | 535,000 | — | 1,843,347(5) | — | 361,335 | 17,550 | 2,757,232 | | | 2022 | 500,000 | — | — | — | 198,750 | 13,612 | 712,362 | | | 2021 | 28,846 | 200,000 | 2,300,100 | — | — | 46 | 2,528,992 | | Andrew Davis Senior Vice President, Chief Business Officer | 2023 | 479,615 | — | 1,843,347(6) | — | 322,560 | 22,185 | 2,667,708 | | | 2022 | — | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — | — | | John Minardo Senior Vice President, Chief Legal Officer and Secretary | 2023 | 511,927 | — | 1,626,486(7) | — | 284,929 | 17,550 | 2,440,891 | | | 2022 | 493,635 | — | 1,734,155 | — | 166,725 | 15,525 | 2,410,040 | | | 2021 | 191,827 | 250,000 | 2,595,002 | — | 105,037 | 6,427 | 3,148,293 | | Michael Shetzline Senior Vice President, Chief Medical Officer, and Head of Research and Drug Development | 2023 | 533,167 | — | 1,734,924(8) | — | 309,733 | 17,550 | 2,595,374 | | | 2022 | 512,482 | 121,000 | 2,080,982 | — | 188,735 | 15,525 | 2,918,724 | | | 2021 | 483,447 | 121,000 | 1,727,931 | — | 285,405 | 18,090 | 2,635,873 |
Summary Compensation Table
* Mr. Davis was not a named executive officer in 2021 and 2022. (1) Reflects the fair value of RSU and PSU awards on the date of grant calculated in accordance with ASC 718. For a discussion of the assumptions used in the valuation of awards made in 2023, see Note 13 to our consolidated financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K that we filed with the SEC on February 16, 2024. All values reported exclude the effects of potential forfeitures. With respect to rTSR PSUs and aTSR PSUs granted to the named executive officers in 2023, the aggregate grant date fair value was determined based on the target number of such awards at the date of grant. Assuming the maximum level of performance (200%) is achieved for the rTSR PSUs, the aggregate grant date fair value of the rTSR PSUs granted in 2023 is as follows: $3,394,781 for Mr. McCourt, $1,047,442 for Mr. Emany, $1,047,442 for Mr. Davis, $924,233 for Mr. Minardo and $985,837 for Dr. Shetzline. Assuming the maximum level of performance (400%) is achieved for the aTSR PSUs, the aggregate grant date fair value of the aTSR PSUs granted in 2023 is as follows: $6,771,496 for Mr. McCourt, $2,089,327 for Mr. Emany, $2,089,327 for Mr. Davis, $1,834,510 for Mr. Minardo and $1,966,447 for Dr. Shetzline. (2) Consists of payments made under our ACIP for performance in the relevant year. For a description of bonuses paid in 2024 for performance in 2023, see the disclosure included elsewhere in this proxy statement under the caption Annual Cash Incentive Program for 2023 Performance. (3) For each executive officer, consists of matching contributions made under our 401(k) plan, as well as an amount attributable to remote work and well-being stipends. The 401(k) matching contribution for each named executive officer for 2023 was $14,850. Amounts for Messrs. McCourt and Davis also include $7,017 and $4,636, respectively, for the incremental cost of gifts, spousal travel and attendance at certain Ironwood-sponsored events and meetings where the executives’ attendance was requested by the company, as well as the value of gifts received; these amounts are inclusive of tax gross-ups of $3,112 and $1,326 paid to Messrs. McCourt and Davis, respectively. (4) Includes the aggregate grant date fair value of 240,595 RSUs and 240,594 PSUs awarded to Mr. McCourt in March 2023, in connection with annual equity awards. (5) Includes the aggregate grant date fair value of 74,236 RSUs and 74,235 PSUs awarded to Mr. Emany in March 2023, in connection with annual equity awards. (6) Includes the aggregate grant date fair value of 74,236 RSUs and 74,235 PSUs awarded to Mr. Davis in March 2023, in connection with annual equity awards. (7) Includes the aggregate grant date fair value of 65,502 RSUs and 65,502 PSUs awarded to Mr. Minardo in March 2023, in connection with annual equity awards. Includes the aggregate grant date fair value of 69,869 RSUs and 69,869 PSUs awarded to Dr. Shetzline in March 2023, in connection with annual equity awards.
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information regarding non-equity and equity awards granted to each of our named executive officers during the year ended December 31, 2023. All non-equity incentive plan awards were made pursuant to our cash bonus program described in more detail elsewhere in this proxy statement under the caption Annual Cash Incentive Program for 2023 Performance. We granted annual long-term equity incentive compensation awards to our named executive officers in the form of RSUs and PSUs in March 2023. All RSUs and PSUs granted in 2023 represented the right to receive shares of our Class A common stock upon the vesting of such awards. The vesting schedule of each such award included in the following table is described in the footnotes to the Outstanding Equity Awards at Fiscal Year-End table.
Grants of Plan-Based Awards
| Name | Type of Award | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) Target ($) | Estimated Future Payouts Under Equity Incentive Plan Awards(2)(#) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | Grant Date Fair Value of Stock Awards ($)(4) | | | | | | Threshold | Target | Maximum | | | | Thomas McCourt | RSUs | 3/8/2023 | — | — | — | — | 240,595 | $2,583,990 | | | rTSR PSUs | 3/8/2023 | — | 60,149 | 120,297 | 240,594 | — | $1,697,397 | | | aTSR PSUs | 3/8/2023 | — | 60,149 | 120,297 | 481,188 | | $1,692,874 | | | ACIP | — | $625,658 | — | — | — | — | — | | Sravan Emany | RSUs | 3/8/2023 | — | — | — | — | 74,236 | $797,295 | | | rTSR PSUs | 3/8/2023 | — | 18,559 | 37,117 | 74,234 | — | $523,721 | | | aTSR PSUs | 3/8/2023 | — | 18,559 | 37,118 | 148,472 | — | $522,332 | | | ACIP | — | $272,500 | — | — | — | — | — | | Andrew Davis | RSUs | 3/8/2023 | — | — | — | — | 74,236 | $797,295 | | | rTSR PSUs | 3/8/2023 | — | 18,559 | 37,117 | 74,234 | — | $523,721 | | | aTSR PSUs | 3/8/2023 | — | 18,559 | 37,118 | 148,472 | — | $522,332 | | | ACIP | — | $240,000 | — | — | — | — | — | | John Minardo | RSUs | 3/8/2023 | — | — | — | — | 65,502 | $703,491 | | | rTSR PSUs | 3/8/2023 | — | 16,376 | 32,751 | 65,502 | — | $462,117 | | | aTSR PSUs | 3/8/2023 | — | 16,376 | 32,751 | 131,004 | — | $460,878 | | | ACIP | — | $230,525 | — | — | — | — | — | | Michael Shetzline | RSUs | 3/8/2023 | — | — | — | — | 69,869 | $750,393 | | | rTSR PSUs | 3/8/2023 | — | 17,467 | 34,934 | 69,868 | — | $492,919 | | | aTSR PSUs | 3/8/2023 | — | 17,468 | 34,935 | 139,740 | — | $491,612 | | | ACIP | — | $240,103 | — | — | — | — | — |
Grants of Plan-Based Awards
(1) Consists of the target cash bonus amount for 2023 performance under our ACIP. As described in more detail elsewhere in this proxy statement under the caption Annual Cash Incentive Program for 2023 Performance, in 2023, Mr. McCourt had an individual bonus target percentage of 75% of his base salary, Messrs. Emany and Davis had an individual bonus target percentage of 50% of their base salaries, and Mr. Minardo and Dr. Shetzline had an individual bonus target percentage of 45% of their base salaries. 70% of bonuses awarded for performance in 2023 were tied solely to the achievement of our corporate goals for 2023, and 30% of bonuses awarded were tied to the achievement of corporate and individual performance goals. In determining Mr. McCourt’s cash bonus for 2023, the board equated Mr. McCourt’s individual performance with that of the company’s performance. Actual bonus payments for 2023 performance are set forth in the Summary Compensation Table elsewhere in this proxy statement. (2) Awards listed in the “Estimated Future Payouts Under Equity Incentive Plan Awards”column are rTSR and aTSR PSUs, and represent threshold, target and maximum potential future payouts with respect to the awards granted to each of our named executive officers in 2023. The rTSR PSUs are eligible to vest based on the achievement of an rTSR performance goal over a three-year performance period and aTSR PSUs are eligible to vest based on the achievement of share price targets during a three-year period as described elsewhere under the caption 2023 Long-Term Equity Awards in the Compensation Discussion and Analysis above. (3) Stock awards listed in the “All Other Stock Awards: Number of Shares of Stock or Units (#)” column are RSUs. Reflects the fair value of RSU and PSU awards on the date of grant calculated in accordance with ASC 718, excluding the effects of potential forfeitures, with the grant date fair value of PSUs determined based on the target number of such awards at the date of grant. For a discussion of the assumptions used in the valuation of the RSU and PSU awards granted to our named executive officers in 2023, see footnote 2 to the Summary Compensation Table elsewhere in this proxy statement.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End As described in our 2021 Proxy Statement, portions of certain Ironwood equity awards were converted into Cyclerion equity awards in connection with our separation from Cyclerion Therapeutics, Inc., or Cyclerion, in April 2019, or the Separation, and are subject to substantially the same terms and conditions as were applicable to the Ironwood equity awards prior to the distribution. The following tables set forth information regarding outstanding Ironwood and Cyclerion equity awards held by each of our named executive officers on December 31, 2023, the last day of our last fiscal year. Information presented has been adjusted, as necessary, to reflect the impact of the Separation. The Cyclerion equity awards were granted to Mr. McCourt in connection with the Separation. None of our other named executive officers hold any Cyclerion equity awards.
Option Exercises and Stock Vested Table
Option Exercises and Stock Vested Table The following table sets forth certain information regarding the exercise of options to purchase our Class A common stock and the vesting of RSUs that were held by our named executive officers during the year ended December 31, 2023.
Option Exercises and Stock Vested Table
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | | Thomas McCourt | 110,962(3) | $46,816 | 242,469 | $2,688,303 | | Sravan Emany | — | — | 21,250 | $200,600 | | Andrew Davis | — | — | 40,613 | $419,655 | | John Minardo | — | — | 36,941 | $389,749 | | Michael Shetzline | — | — | 89,069 | $991,313 |
Option Exercises and Stock Vested Table
(1) Computed by determining the difference between the market price of our Class A common stock on the date of exercise and the exercise price of the exercised stock option, multiplied by the number of shares acquired upon exercise of the option. (2) Computed by multiplying the number of shares of Class A common stock underlying the vested RSUs by the market price of our Class A common stock on the vesting date. (3) Represents shares of our Class A common stock that Mr. McCourt acquired through an option exercise as such stock options were expiring and then sold on the open market.
Potential Payments Upon Termination or Change of Control
Potential Payments Upon Termination or Change of Control Except as described in this proxy statement, there are currently no other agreements or arrangements pursuant to which our named executive officers would receive severance or other benefits in the event of a termination of employment or change of control of Ironwood. The following table presents our estimate of the amount of severance and other benefits to which our named executive officers would be entitled if a triggering event described below occurred on December 31, 2023. The closing price of our Class A common stock as listed on the Nasdaq Global Select Market on December 29, 2023 was $11.44 per share.
Potential Payments Upon Termination or Change of Control
| | | Involuntary Termination without Cause or a Constructive Termination(1) | Termination Following a Change of Control(1) | Death(2) | | Thomas McCourt | Cash Severance | $1,251,315 | $1,668,420 | — | | | Non-Equity Incentive Plan Compensation | $1,564,144 | $1,876,973 | — | | | Equity Acceleration(3) | | | | | | RSUs | $5,310,951 | $6,319,525 | $6,319,525 | | | PSUs | — | $7,078,866 | — | | | Other Benefits(4) | $74,871 | $79,828 | — | | | Total | $8,201,281 | $17,023,612 | $6,319,525 | | Sravan Emany | Cash Severance | $545,000 | $817,500 | — | | | Non-Equity Incentive Plan Compensation | $545,000 | $681,250 | — | | | Equity Acceleration(3) | | | | | | RSUs | — | $1,335,460 | $1,335,460 | | | PSUs | — | $1,397,018 | — | | | Other Benefits(4) | $60,000 | $60,000 | — | | | Total | $1,150,000 | $4,291,228 | $1,335,460 | | Andew Davis | Cash Severance | $480,000 | $720,000 | — | | | Non-Equity Incentive Plan Compensation | $480,000 | $600,000 | — | | | Equity Acceleration(3) | | | | | | RSUs | — | $1,891,101 | $1,891,101 | | | PSUs | — | $875,011 | — | | | Other Benefits(4) | $87,429 | $101,143 | — | | | Total | $1,047,429 | $4,187,255 | $1,891,101 | | John Minardo | Cash Severance | $512,728 | $769,092 | — | | | Non-Equity Incentive Plan Compensation | $461,455 | $576,819 | — | | | Equity Acceleration(3) | | | | | | RSUs | — | $1,788,678 | $1,788,678 | | | PSUs | — | $2,066,121 | — | | | Other Benefits(4) | $69,238 | $73,857 | — | | | Total | $1,043,421 | $5,274,567 | $1,788,678 | | Michael Shetzline, M.D., Ph.D. | Cash Severance(5) | $800,343 | $800,343 | — | | | Non-Equity Incentive Plan Compensation | $480,206 | $600,257 | — | | | Equity Acceleration(3) | | | | | | RSUs | $1,363,602 | $1,831,327 | $1,831,327 | | | PSUs | — | $1,994,587 | — | | | Other Benefits(4) | $60,000 | $60,000 | — | | | Total | $2,704,151 | $5,286,514 | $1,831,327 |
Potential Payments Upon Termination or Change of Control
Represents amounts payable under the terms of the named executive officer severance arrangements. Non-equity incentive plan compensation payment amount assumes no bonus amounts for 2023 have been paid to the executive officer as of December 31, 2023, and that all 2022 bonus amounts have been paid as of such date, in each case, as would be consistent with Ironwood’s historical practice. With respect to RSUs, the value is calculated by multiplying the number of unvested RSUs with vesting provisions based solely on time that would be fully accelerated (if any) in connection with the named executive officer’s death by $11.44, the closing price of our Class A common stock on the Nasdaq Global Select Market on December 29, 2023, in accordance with the terms of the award agreements issued under our equity incentive plans. With respect to PSUs, the treatment of such awards in the event of the named executive officer’s death or permanent disability is described elsewhere in this proxy statement under the caption Treatment of Equity in the Event of Death or Permanent Disability and in footnote 4 to this table. (3) With respect to RSUs, the value is calculated by multiplying the number of unvested RSUs with vesting provisions based solely on time that would be accelerated (if any) by $11.44, the closing price of our Class A common stock on the Nasdaq Global Select Market on December 29, 2023, in each case, in accordance with the terms of our severance arrangements with each executive officer. With respect to PSUs, the value in the case of a qualifying termination in connection with a change of control is calculated by multiplying the number of unvested and unearned PSUs that would be accelerated (if any) by $11.44, the closing price of our Class A common stock on the Nasdaq Global Select Market on December 29, 2023, as described in further detail above under the caption Treatment of PSUs in the Event of a Change of Control. In the case of a qualifying termination or death prior to a change in control, the PSUs will remain eligible to vest based on the attainment of the applicable performance goals, subject to applicable proration, as described above under the captions Severance Benefits not in Connection with a Change of Control and Treatment of Equity in the Event of Death or Permanent Disability. The values in this table include the 2021 rTSR PSUs, for which the performance period ended on December 31, 2023, at 100% of target as the PSUs became earned at 100% of the target, with such earned PSUs vesting amount certified by the compensation and HR committee on January 17, 2024. The values in this table assume that the 2022 rTSR PSUs and 2023 rTSR PSUs will become earned at 100% based on their actual TSR as of December 31, 2023, and that the 2023 aTSR PSUs remain unearned based on actual stock price performance as of December 31, 2023. (4) Includes outplacement assistance benefits and subsidized COBRA benefits. With respect to an involuntary termination without cause or a constructive termination, includes the value of the payment of an additional amount equal to six months of subsidized COBRA benefits for Dr. Shetzline in the event he is not eligible to participate in the group medical plan of another employer following the one-year anniversary of his termination date. With respect to an involuntary termination of employment without cause or a constructive termination, includes the value of the payment of an additional amount equal to six months of base salary for Dr. Shetzline in the event he does not obtain full-time employment within six months following the one-year anniversary of his termination date.
CEO Pay Ratio
CEO Pay Ratio Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are required to disclose the median of the annual total compensation of our employees, the annual total compensation of our principal executive officer on December 31, 2023, Mr. McCourt, and the ratio of these two amounts. For 2023, our last completed fiscal year: • The estimated median of the annual total compensation of all employees of our company (other than Mr. McCourt) was $275,531; and • Mr. McCourt’s annual total compensation, as reported in the Summary Compensation Table included elsewhere in this proxy statement, was $7,583,270. Based on this information for 2023, we estimate that the ratio of the annual total compensation of Mr. McCourt to the median annual total compensation of all employees was approximately 28 to 1. We believe this pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records, and the methodology described below. Because the SEC rules for identifying the median of the annual total compensation of our employees and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio for Ironwood, as other companies have employees based in different locations (including other countries), have different business models and employee needs, have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their pay ratios. To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and Mr. McCourt, we took the following steps: • We determined that it was appropriate to re-identify our median employee for the purposes of the pay ratio disclosure for 2023. We determined that, as of December 31, 2023, our employee population consisted of 216 individuals, excluding 44 individuals who joined Ironwood as a result of our acquisition of VectivBio Holding AG in 2023. This population consisted of our full- and part-time employees. We utilized a December 31, 2023 identification date as it is consistent with our CEO pay ratio reporting last year, our year-end financial reporting, and other reporting dates used in this proxy statement. The year-end identification date enables us to make such identification in a reasonably efficient and economical manner. • To identify the “median employee” from our employee population, we started with the gross earnings of our employees as reflected in our payroll records for 2023 as of the identification date, and, for our U.S. employees, as reportable to the Internal Revenue Service on Form W-2. We subtracted 2023 equity earnings from stock option exercises and stock award vesting and replaced them with the grant-date fair value of equity awards granted in 2023. We subtracted 2022 annual bonuses (paid in 2023) and replaced them with 2023 annual bonus awards (paid in 2024). We also added the company’s 401(k) matching contribution for our U.S. employees. For employees hired during 2023, we annualized base salary and 2023 bonus amounts, but not the value of equity granted in 2023 as new hire awards are made on a one-time basis. We did not make any cost-of-living adjustments in identifying the “median employee.” Once we identified the median employee, for purposes of the pay ratio, we calculated his or her compensation in the same manner as we do for Summary Compensation Table purposes.
Pay Versus Performance
Pay Versus Performance Under Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are presenting information that demonstrates the relationship between compensation actually paid, as computed under SEC rules, to our named executive officers and certain financial performance measures for the years ended December 31, 2023, 2022, 2021 and 2020. The compensation and HR committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the fiscal years shown. For additional information about our performance-based pay philosophy and how we align executive compensation with Ironwood’s performance, please refer to the Compensation Discussion and Analysis section included elsewhere in this proxy statement.
Pay Versus Performance
| Year | Summary Compensation Table Total for First PEO [Mark Mallon] | Summary Compensation Table Total for Second PEO [Thomas McCourt] | Compensation Actually Paid to First PEO [Mark Mallon] | Compensation Actually Paid to Second PEO [Thomas McCourt] | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | Value of Initial Fixed $100 Investment Based On: | | Net Income (Loss) (in millions) | Adjusted EBITDA from Organic Business (in millions) | | | | | | | | | Total Shareholder Return | Peer Group Total Shareholder Return | | | | (a) | (b)(1) | (b)(1) | (c)(2) | (c)(2) | (d)(3) | (e)(4) | (f)(5) | (g)(6) | (h)(7) | (i)(8) | | 2023 | $N/A | $7,583,270 | $N/A | $4,632,286 | $2,615,301 | $1,967,644 | $85.95 | $115.42 | $(1,031.56) | $267.64 | | 2022 | $N/A | $7,893,266 | $N/A | $10,159,660 | $2,305,695 | $2,952,674 | $93.09 | $111.27 | $175.07 | $253.07 | | 2021 | $170,576 | $8,810,004 | $(8,684,142) | $9,733,970 | $2,917,054 | $2,581,189 | $87.60 | $124.89 | $528.45 | $253.97 | | 2020 | $6,821,113 | $N/A | $4,419,700 | $N/A | $2,496,976 | $2,958,190 | $85.57 | $125.69 | $106.18 | $162.56 |
Pay Versus Performance
(1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Mallon, our former chief executive officer, and Mr. McCourt, our current chief executive officer, for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to Summary Compensation Table elsewhere in this proxy statement for information on Mr. McCourt’s compensation. Mr. Mallon served as our chief executive officer during 2020 and 2021. Effective March 12, 2021, Mr. Mallon resigned from his position as chief executive officer and Mr. McCourt became interim chief executive officer and subsequently permanent chief executive officer effective June 2, 2021. (2) The dollar amounts reported in column (c) represent the “compensation actually paid” to the principal executive officers, or PEOs, Messrs. Mallon and McCourt, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Messrs. Mallon and McCourt, as applicable, during the applicable years, and are based on valuation assumptions required by the SEC, which are unlikely to reflect actual amounts realized at vesting or exercise of equity awards, as applicable. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Messrs. Mallon’s and McCourt’s total compensation for each applicable year to determine the compensation actually paid:
Pay Versus Performance
| Year | PEO Name | Reported Summary Compensation Table Total for PEO | Reported Value of Equity Awards (a) | Equity Award Adjustments (b) | Compensation Actually Paid to PEO | | 2023 | Thomas McCourt | $7,583,270 | $(5,974,225) | $3,023,271 | $4,632,286 | | 2022 | Thomas McCourt | $7,893,266 | $(6,473,069) | $8,739,463 | $10,159,660 | | 2021 | Mark Mallon | $170,576 | $— | $(8,854,718) | $(8,684,142) | | 2021 | Thomas McCourt | $8,810,004 | $(7,236,498) | $8,160,464 | $9,733,970 | | 2020 | Mark Mallon | $6,821,113 | $(5,423,731) | $3,022,318 | $4,419,700 |
Pay Versus Performance
(a) Represents the deduction from the “Reported Summary Compensation Table Total for PEO” column for the total grant date fair value of equity awards reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year. (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. Equity values are calculated in accordance with ASC 718. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:
Pay Versus Performance
| Year | PEO Name | Year End Fair Value of Equity Awards | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or Other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | Thomas McCourt | $6,203,423 | $(2,858,574) | — | $(321,578) | $— | — | $3,023,271 | | 2022 | Thomas McCourt | $7,807,002 | $1,076,844 | — | $(144,383) | $— | — | $8,739,463 | | 2021 | Mark Mallon | $— | $— | — | $(241,452) | $(8,613,266) | — | $(8,854,718) | | 2021 | Thomas McCourt | $8,164,222 | $57,645 | — | $(61,403) | $— | — | $8,160,464 | | 2020 | Mark Mallon | $4,811,824 | $(1,031,283) | — | $(758,223) | $— | — | $3,022,318 |
Pay Versus Performance
(3) The dollar amounts reported in column (d) represent the average of the amounts reported for the company’s non-PEO named executive officers, or NEOs, as a group in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the non-PEO NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Andrew Davis, Sravan Emany, John Minardo and Michael Shetzline; (ii) for 2022, Sravan Emany, John Minardo, Jason Rickard and Michael Shetzline; (iii) for 2021, Sravan Emany, John Minardo, Jason Rickard, Michael Shetzline and Gina Consylman; and (iv) for 2020, Gina Consylman, Thomas McCourt, Jason Rickard and Michael Shetzline. (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the non-PEO NEOs as a group, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the non-PEO NEOs during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the average total compensation for the non-PEO NEOs as a group for each year to determine the compensation actually paid, using the same methodology described above in Note 2:
Pay Versus Performance
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | Average Reported Value of Equity Awards (a) | Average Equity Award Adjustments (b) | Compensation Actually Paid to Non-PEO NEOs | | 2023 | $2,615,301 | $(1,762,026) | $1,114,369 | $1,967,644 | | 2022 | $2,305,695 | $(1,531,837) | $2,178,816 | $2,952,674 | | 2021 | $2,917,054 | $(2,332,567) | $1,996,702 | $2,581,189 | | 2020 | $2,496,976 | $(452,817) | $914,031 | $2,958,190 |
Pay Versus Performance
(a) Represents the deduction from the “Average Reported Summary Compensation Table Total for Non-PEO NEOs” column for the average total grant date fair value of equity awards reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year.
Comparative Analysis of the Pay versus Performance Table
Comparative Analysis of the Pay versus Performance Table As described in more detail in the Compensation Discussion and Analysis section included elsewhere in this proxy statement, our compensation program is designed to provide compensation and incentives that align employee actions and motivations with the interests of our stockholders; attract, retain, motivate, and reward outstanding talent across the company through well-communicated programs that are aligned with our vision and mission, and support a positive company culture. We consider several performance measures to ensure executives are incentivized to accomplish these objectives, many of which are not presented in the pay versus performance table. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance Table above.
Comparison of “Compensation Actually Paid” to Cumulative TSR
Comparison of “Compensation Actually Paid” to Cumulative TSR The “compensation actually paid” in the graph below reflects Mr. Mallon’s CAP in 2020, Mr. McCourt’s CAP in 2022 and 2023, and, for purposes of a graphical representation, a weighted average CAP for both for 2021, or Average PEO CAP. The graph below demonstrates the “compensation actually paid” amounts shown for our PEOs, Messrs. Mallon and McCourt, as applicable, is generally aligned with the company’s cumulative TSR over the four years presented in the Pay versus Performance Table above. The alignment of compensation actually paid with the company’s cumulative TSR over the period presented is because a significant portion of the compensation actually paid to the NEOs is comprised of equity awards. As described in more detail in the Compensation Discussion and Analysis section included elsewhere in this proxy statement, in 2023, approximately 79% of the value of total compensation awarded to our CEO and 68% of the value of total compensation awarded to the other NEOs consists of equity awards, including RSU and PSU awards.
Comparison of “Compensation Actually Paid” to Net Income (Loss)
Comparison of “Compensation Actually Paid” to Net Income (Loss) The graph below reflects the relationship between the Average PEO CAP and average other NEOs CAP and the company’s net income for the years ended December 31, 2020, 2021, 2022 and 2023. Net income for the year ended December 31, 2021, included a $338 million non-cash, non-recurring income tax benefit related to the release of the valuation allowance against the majority of the company’s deferred tax assets in the second quarter of 2021. Net loss for the year ended December 31, 2023, included a non-recurring charge of approximately $1.1 billion related to acquired in-process research and development from the acquisition of VectivBio in the second quarter of 2023. The company does not use net income as a performance metric in its compensation program to determine named executive officers’ compensation.
Comparison of “Compensation Actually Paid” to Company-Selected Measure (Adjusted EBITDA from Organic Business)
Comparison of “Compensation Actually Paid” to Company-Selected Measure (Adjusted EBITDA from Organic Business) The graph below reflects the relationship between the Average PEO CAP and average Other NEOs CAP and the company’s Adjusted EBITDA from organic business, which is the Company Selected Measure, for the years ended December 31, 2020, 2021, 2022 and 2023:

DEF 14A of Ironwood Pharmaceuticals Inc

Our Board of Directors

Who We Are

Who We Are

Who We Are

Who We Are

Who We Are

Who We Are

Who We Are

Who We Are

Who We Are

Who We Are

Who We Are

Who We Are

Who We Are

Director Compensation Table

Director Compensation Table

Director Compensation Table

Goals and Accomplishments

Goals and Accomplishments

Goals and Accomplishments

2023 Base Salary

Annual Cash Incentive Program for 2023 Performance

Annual Cash Incentive Program for 2023 Performance

Annual Cash Incentive Program for 2023 Performance

Annual Cash Incentive Program for 2023 Performance

Annual Cash Incentive Program for 2023 Performance

Annual Cash Incentive Program for 2023 Performance

Annual Cash Incentive Program for 2023 Performance

2023 Long-Term Equity Awards

2023 Annual Equity Awards

2023 Annual Equity Awards

2023 Annual Equity Awards

2023 Annual Equity Awards

2023 Annual Equity Awards

2023 Annual Equity Awards

2023 Annual Equity Awards

2021 rTSR PSUs Payout

2021 rTSR PSUs Payout

2021 rTSR PSUs Payout

Executive Severance Agreements and Benefits in the Event of a Change of Control

2024 Annual Equity Awards

2024 Annual Equity Awards

2024 Annual Equity Awards

2024 Annual Equity Awards

2024 Annual Equity Awards

2024 Annual Equity Awards

Executive Compensation Governance

Role of the Compensation Consultant: Benchmarking and Peer Group Analysis

Role of the Compensation Consultant: Benchmarking and Peer Group Analysis

Role of the Compensation Consultant: Benchmarking and Peer Group Analysis

Role of the Compensation Consultant: Benchmarking and Peer Group Analysis

Executive Compensation Risk Assessment

Summary Compensation Table

Summary Compensation Table

Summary Compensation Table

Grants of Plan-Based Awards

Grants of Plan-Based Awards

Grants of Plan-Based Awards

Outstanding Equity Awards at Fiscal Year-End

Option Exercises and Stock Vested Table

Option Exercises and Stock Vested Table

Option Exercises and Stock Vested Table

Potential Payments Upon Termination or Change of Control

Potential Payments Upon Termination or Change of Control

Potential Payments Upon Termination or Change of Control

CEO Pay Ratio

Pay Versus Performance

Pay Versus Performance

Pay Versus Performance

Pay Versus Performance

Pay Versus Performance

Pay Versus Performance

Pay Versus Performance

Pay Versus Performance

Pay Versus Performance

Comparative Analysis of the Pay versus Performance Table

Comparison of “Compensation Actually Paid” to Cumulative TSR

Comparison of “Compensation Actually Paid” to Net Income (Loss)

Comparison of “Compensation Actually Paid” to Company-Selected Measure (Adjusted EBITDA from Organic Business)